A decentralized Internet is one where power and control is distributed across the “network of networks”. This helps ensure a more resilient network and avoiding single-points of failure and control.

Internet Society Pulse provides information about trends of centralization in the Internet by mapping the distribution of market shares in core services and how they have evolved over time.

Indicators of Internet Centralisation

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Gini Coefficient

The Gini coefficient measures the degree of inequality in a distribution and is widely used in economics to measure wealth and income inequality. The benefit of using the Gini coefficient is that it will work on any distribution in which the baseline (ideal state) is complete equality. Thus, in terms of being an indicator of Internet (de)centralization we can think of such an ideal state as one in which providers have more-or-less equal shares of the market.

The Gini coefficient ranks income distribution on a scale between 0 and 1, where 1 denotes complete inequality (one actor owns all the shares), while a measure of 0 denotes perfect equality (every actor has exactly the same share). A higher number is consequently indicative of a higher degree of concentration.

[While values between 0-1 are helpful in indicating a greater or lesser degree of concentration it’s important to note that very different distributions can result in identical Gini values. Thus, to learn more about the underlying distribution its important to also look at the accompanying Lorenz curve that plots the relationship between market share (X-axis) and the share of companies in the sample (Y-axis)]

To compute this metric, we measure each country’s marketshare of core Internet services. We weight that marketshare by that country’s population. We then compute the Gini coefficient of the weighted values. 0 means perfect equity (every country has a marketshare perfectly proportional to their population), 1 means perfect inequity (one country has all of the marketshare).

To produce an Internet-wide metric, we take the mean of Gini coefficients across all provider types.

See this blog post for background on this metric.

Internet-wide Gini Coefficient over time (data source: W3 Techs)
Herfindahl-Hirschman Index

The Herfindahl-Hirschman Index (HHI) is a commonly accepted measure of market concentration and is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers. HHI values are in the range 0 to 10,000.

A key benefit with HHI is that the index value also reflects information about the underlying distribution of market shares. It approaches zero when a market is occupied by a large number of actors of relatively equal size and reaches its maximum of 10,000 points when a market is controlled by a single actor. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases.

A market with an HHI of less than 1,500 is considered to be a competitive marketplace, an HHI of 1,500 to 2,500 to be a moderately concentrated marketplace, and an HHI of 2,500 or greater to be a highly concentrated marketplace.